Shiseido Company,limited · TSE:4911
Shiseido Company,limited — Shiseido Co Ltd Ord — Q2 2024 Earnings Presentation
34 slides from Shiseido Company,limited's earnings presentation, Aug 7, 2024
Slide 1: 2024 First Half Results and Strategic Actions for Second Half
2024 First Half Results Ganuary—June) and Strategic Actions for Second Half August 7, 2024 Shiseido Company, Limited Ayako Hirofuji Chief Financial Officer SHISEIDO
Slide 2: Forward-looking statements
In this document, statements other than historical facts are forward-looking statements that reflect our plans and expectations. These forward-looking statements involve risks, uncertainties, and other factors that may cause actual results and achievements to differ from those anticipated in these s
Slide 3: 2024 1H Key Highlights
2024 1H Key Highlights Net Sales YoY (LfL’): -1%, Core Operating Profit: ¥19.3 bn Japan local continued to deliver robust growth thanks to selection and concentration Business transformation progressing on track @ Net Sales YoY (LfL’): -1% >» Japan: robust growth led by core brands, selection and co
Slide 4: Full-year Forecast Maintained, Company-wide Commitment to Achieving Targets
Full-year Forecast Maintained, Company-wide Commitment to Achieving Targets Strengthen actions aligned with dynamic changes in Chinese consumption Ensuring profit delivery for medium to long-term success © Sharp deceleration in Travel Retail profitability on the back of changing in purchasing behavi
Slide 5: 2024 1H: Executive Summary
2024 1H: Executive Summary (Billion yen) 2023 Net ees 2024 Net sales change Change % ex Neutral % Loe? Net Sales 494.2 100% 508.5 100% +14.3 +2.9% 4.1% -0.5% Core Operating Profit 28.0 5.7% 19.3 3.8% -8.8 —31.3% Non-recurring Items -14.4 -2.9% -22.0 -4.3% -7.6 Operating Profit 13.6 2.8% =P -0.5% -16
Slide 6: Net sales by brand: Fragrance and Drunk Elephant Remained Solid
Fragrance and Drunk Elephant Remained Solid with Strength in EMEA; Sales Stalled Across Other Key Brands, Posting Negative to Single Digit Growth due to Weakness in Travel Retail, China, and Americas Net sales by brand FX, etc. Like-for-like* (Billion yen) Transferred] brands Dr. Dennis Gross Skinca
Slide 7: Net Sales: Remained Almost Flat YoY in 2024 1H
Net Sales: Remained Almost Flat YoY in 2024 1H Japan and EMEA Achieved Double-digit Growth Offset by Negative Growth in Travel Retail, China, and Americas 2023 2024 (vs. 2022) (vs. 2023) Like-for-like” Ql Q2 Q3 Q4 FY Ql Q2 1H Japan +8% +9% +6% +17% +10% +20% +7% 413% China —-3% +20% -9% —21% —5% -3%
Slide 8: ⚫ ➢ • • 2019年比※3 ➢ • 1Q 2Q 3Q 4Q 1Q 2Q ⚫
⚫ ➢ • • 2019年比※3 ➢ • 1Q 2Q 3Q 4Q 1Q 2Q ⚫ ➢ • • • ➢
Slide 9: China and Travel Retail: Dynamic Market Changes and Polarization Continued
China and Travel Retail: Dynamic Market Changes and Polarization Continued Q2 Market Consumers pulling back on spending and increasing savings Weakening sentiment and changing in Strong growth in “618” promotion led by TikTok, while price competition purchasing behaviors of Chinese consumers continu
Slide 10: EMEA and Asia Pacific: Strong Growth; Americas Temporary Production Decline
EMEA and Asia Pacific: Strong Growth Americas: Temporary Production Decline, but on Track for Recovery in 2H Continued growth across all categories with market expansion @ Shiseido External Sales’: 1H +12% / Q2 +6% » SHISEIDO, narciso rodriguez, Drunk Elephant: Strong growth narciso rodriguez Growth
Slide 11: COGS Ratio
COGS Ratio : Steadily Improving as Business Transfer Impacts Diminish COGS LfL" Ratio: Improved from Q1 Thanks to Lower Inventory Write-offs, Mix Improvement, Price Hikes (+) Price hike effect and mix improvement (+) Decline of negative impact from MSA” for business transfers (2023 3.7pts -> 2024 0.
Slide 12: Posted YoY Decline in Profit
Posted YoY Decline in Profit: Higher Profits Driven by Sales Growth in Japan, EMEA and Asia Pacific, Structural Reforms, Agile Cost Management More Than Offset by Sharp Profit Decline in Travel Retail Japan: China: Asia Pacific: Americas: EMEA: Travel Retail: Other/ Adjustments: Significant increase
Slide 13: Our Strategic Approach to Chinese Consumers
Our Strategic Approach to Chinese Consumers in an Ever-Changing Environment Building a sustainable profit delivery business model in a moderately growing environment to emphasize quality growth ® Growth strategy » Investing in key focus areas, maximize sales in agile growth areas in a weak macro-eco
Slide 14: Japan: Clearer Focus Accelerated Growth
Japan: Clearer Focus Accelerated Growth, Continue to Strengthen Actions in 2H ®@ Local > Continue to strengthen investments in core brands and hero products Increase gross margin through mix improvement * Core brands fueled the increase of loyal users, further actions underway in 2H > New market cre
Slide 15: Global Cost Reduction and Profit Boosting
Global Cost Reduction and Profit Boosting Making steady progress towards achieving benefits of ¥40.0 bn+; The Global Transformation Committee to make sure the delivery @ 1H Key Actions > Japan : COGS reduction by focusing on core brands and hero products; the implementation of ERIP* > China : optimi
Slide 16: To Ensure Sustainable Growth Over the Medium to Long Term
To Ensure Sustainable Growth Over the Medium to Long Term August 7, 2024 Shiseido Company, Limited Kentaro Fujiwara President and COO SHISEIDO
Slide 17: Vision and Strategic Direction for 2024 and 2025
Vision and Strategic Direction for 2024 and 2025 Executing Business Transformation: Achieving Profitability and Resilience through Growth and Structural Reforms ®@ Global cost reduction (¥40.0 bn+) @® Complete Japan structural reform and accelerate growth ® Achieve high-quality sustainable growth in
Slide 18: Japan: Accelerate Progress on Mirai Shift NIPPON 2025
Japan: Accelerate Progress on “Mirai Shift NIPPON 2025” ® Brand Strategy > Selection and concentration of brands and SKUs > Strategic price increases > New market creation through strategic marketing ® Touchpoint Strategy > Strategic collaboration with key retailers > Generate synergies in online-of
Slide 19: Americas, EMEA and Asia Pacific: Accelerate Growth
Americas, EMEA and Asia Pacific : Accelerate Growth to Optimize Geographical Footprint ® Brand Strategy >» Strengthen investments with selection and concentration in skin beauty and core brands >» Accelerate growth of Dr. Dennis Gross Skincare, achieve synergy at an early stage >» Rebuild and enhanc
Slide 20: Our Views on Chinese Market
Our Views on Chinese Market As of February 2024 Current ®@ Shifting from rapid growth to steady growth ®@ By price range: increasing market polarization @ Trends by price range - Continued resilience in high-prestige - High prestige: high growth - Prestige and premium markets softening - Prestige an
Slide 21: Tackle Our Fundamental Issues
Tackle Our Fundamental Issues New Business Strategy to be Announced in late November 2024 ® Current issues to be addressed: [external factors] slowdown in Chinese consumer spending, manifestations of risk factors @ Fundamental issues: [internal factors] Company-wide challenges > China: build a resil
Slide 22: Be a Global Winner
S HLSEIDO, Be a Global Winner |
Slide 23: Brand product launches
cle de peau REAUT P > New Serum, “The Serum II” > New treatment powder foundation The Serum II Radiant Powder Foundation II SHIL/EIDO GINZA TOKYO > ULTIMUNE’s 10" anniversary ELIXIR > High functionality aging-care serum > Most prestigious skincare line » Renewed Men's Cream BELIEVE IN BEAUTY. The Se
Slide 24: Supplemental Data Focused Products in 2H: China
Supplemental Data 2 Focused Products in 2H: China SHI/EIDO GINZA TOKYO ~ cle de peau >» Cream for wrinkle improvement » Foundation Serum > Most prestigious skincare line 4 yay xmaczemmen\ TARR TAN —- Pe eras enan j SHIZEIDO Intensive Wrinklespot_ Revitalessence Treatment Skin Glow Foundation ake Fut
Slide 25: Supplemental Data: KPI Trends
Supplemental Data 3 KPI Trends mmm Net Sales Core Operating Profit ——Core Operating Profit Margin (Billion yen) 3.1% &) 2022 2023 2024 25
Slide 26: Supplemental Data: Q2 Net Sales by Brand
Supplemental Data 4 Q2 Net Sales by Brand Like-fortike* (Billion yen) FX, etc. a Transferred Transferred. brands Dr. Dennis brands SHISEIDO || -8% Clé de | | ELINIR ena Fragrance Beaute Go a 4% “13% Drunk IPSA Other 254.2 Elephant ~23% brands 2591 % 2023 2023 Q2 2024 Q2 2024 Q2 excl. business excl.
Slide 27: Supplemental Data: Q2 Net Sales and Core OP by Segment
Supplemental Data 5 Q2 Net Sales and Core Operating Profit by Reportable Segment Top: Net Sales ; % of Net Sales/ % of Net Sales) YoY YoY YoY YoY Bottom: Core OP 2023 Core OPM %"" 2024 CoreOPM%'! Change Change % FX-Neutral % LAL 672 (Billion yen) Japan 63.5 25.0% 67.9 26.2% $4.5 +7.0% +7.0% +7.2% As
Slide 28: Supplemental Data: 1H Net Sales and Core OP by Segment
Supplemental Data 6 1H Net Sales and Core Operating Profit by Reportable Segment Top: Net Sales . % of Net Sales/ % of Net Sales/ YoY YoY YoY YoY Bottom: Core OP 2023 Core OPM %"! 2024 Core OPM %"! Change Change % — FX-Neutral % LAL %"2 (Billion yen) Japan 125.2 25.3% 141.5 27.8% +164 +13.1% +13.1%
Slide 29: Supplemental Data: 1H Net Sales by Category
Supplemental Data 7 1H Net Sales by Category » » YoY Change%/ lapan 2023 Net les 2024 Net Sales change xn og! woe? Prestige 38.0 30.4% 484 34.2% +10.5 Premium ss—<it~‘isé«SB2«WSCtti(ié‘“TCs*~<C*é‘«SB 54.7% 4. — “Ud% «SST 11.1% “4180 “100% «141.5 100% ‘164 —«+13.1% +13.3% -6.6% Asia Pacific Prestige
Slide 30: Supplemental Data: 1H Cost Structure
Supplemental Data 8 1H Cost Structure (% of Net Sales based on Core Operating Profit) SG&A" 67.9% 72.2% a g @ Marketing investments Marketing Pee 27.2% +2.4 pts > Strengthened investments for brand equity investments 70% improvement -0.2pts @ Personnel expenses > Inflation impact Brand development/
Slide 31: Supplemental Data: SG&A
Supplemental Data 9 INSOS&A 2023 % of 2024 % of Yov Yor KX Neutal Net Sales Net Sales Change Change % 9 (Billion yen) % Marketing investments" 1711 34.6% 187.9 37.0% +16.8 +9.8% +2.7% rane development / 18.6 3.8% 18.5 3.6% -0.0 -0.2% -3.0% Personnel expenses 67.0 13.6% 73.3 14.4% +6.3 +9.3% +2.3% Ot
Slide 32: Supplemental Data: Cash Flow Management
Supplemental Data 10 Cash Flow Management Free Cash Flow: -27.5 Investing CF: -59.1 (Billion yen) Operating CF: +31.6 Depreciation Provisions for and amortization structural reform 437.5 +171 Other CF from er operating activities | +10.5 = Profit | before tax | +4,2 | Interest- — Inventories Trade c
Slide 33: Supplemental Data: Non-recurring Items
Supplemental Data 11 Non-recurring Items (Billion yen) 2024 Core Operating Profit Gain / Loss on Sale of Business Structural Reform Expenses Government Grant Income on COVID-19 Impairment Losses Gain on Sale of Non-current Assets Acquisition-related Costs One-time Costs Related to Internal System Ch
Slide 34: SHISEIDO
SHI/SEIDO